Do Slowing Property Prices Make 2018 the Moment to Invest?

Property portal Rightmove yesterday released its 2018 forecast for the UK’s property market. The forward guidance wouldn’t have made particularly enjoyable reading for those who bought a property at some point during 2017.

Rightmove predicting that growth will be close to non-existent over most of the country and London and the commuter belt are expected to see average prices slide by up to 2%.

However, while most sections of the market have been stagnant this year, it isn’t all bad news with first time buyers still active and numbers actually picking up. The graph below, featured in The Telegraph newspaper, demonstrates how much of the strain first time buyers have been picking up to keep the market reasonably buoyant over the past few years.

However, with mortgage interest rates still low, though expected to increase over coming years, could a sluggish 2018 real estate market make it the ideal time for buy-to-let landlords to pick up a new investment property? A market slowdown could well mean opportunities for buyers to negotiate slightly lower prices than we have seen recently. Some market participants, normally the last to sound negative, also believe that we could see a wider price drop over the next couple of years.

Quoted in The Telegraph, property consultant to high net worth buyers and investors Henry Pryor goes further and feels now might be the “worst time in a generation” to buy a property in the UK. He warns “the reality is that house prices are not a one-way bet.”

While Pryor was talking specifically about first-time buyers rather than property investors, his words will also hold some interest for the latter category. If the market does slide in 2018 the question investors will be asking themselves is whether this will prove to be a temporary blip or usher in a more significant correction. It could be worth waiting further before looking for an investment property.

However, while longer term forecasts are notoriously unreliable with so many changeable factors in play, for the moment predictions are that the slowdown will reverse by 2019/20 with prices starting to rise again. London particularly is expected to recover and return to leading the way in UK property prices growth. With inflation levels ticking up and interest rates expected to also be gradually hiked over the next few years as a measure to manage inflation and also bring them back somewhere closer to historical norms, 2018 could also be a last chance for buyers to secure a lower fixed rate mortgage.

Risk Warning:

Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.

There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.